We could not find any results for:
Make sure your spelling is correct or try broadening your search.
Register for Free to get streaming real-time quotes, interactive charts, live options flow, and more.
| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Axiom European Financial Debt Fund Limited | LSE:AXI | London | Ordinary Share | GG00BTC2K735 | ORD NPV |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 85.50 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
TIDMAXI
RNS Number : 7168N
Axiom European Financial Debt Fd Ld
11 August 2017
11 August 2017
Hot Features
Premium
Axiom European Financial Debt Fund Limited
Results for the six months ended 30 June 2017
A copy of the Company's Half-Yearly Report and
Unaudited Condensed Financial Statements for the
six months ended 30 June 2017 will shortly be available
to view and download from the Company's website,
www.axiom-ai.com. Neither the contents of the Company's
website nor the contents of any website accessible
from hyperlinks on the Company's website (or any
other website) is incorporated into or forms part
of this announcement.
Enquiries to:
Elysium Fund Management Liberum Capital MHP Communications
Limited Limited 6 Agar Street
PO Box 650 Level 12 London
1(st) Floor Ropemaker Place WC2N 4HN
Royal Chambers 25 Ropemaker
St Julian's Avenue Street Rachel Cohen
St Peter Port London Reg Hoare
Guernsey EC2Y 9LY Giles Robinson
GY1 3JX Ollie Hoare
Richard Bootle axiom@mhpc.com
axiom@elysiumfundman.com Henry Freeman Tel: +44 20 3128
Tel: +44 1481 810 8100
100 Tel: +44 20 3100
2232
www.axiom-ai.com
The following text is extracted from the Half-Yearly
Report and Financial Statements of the Company
for the six months ended 30 June 2017:
Highlights
30 June 30 June 31 December
2017 (unaudited) 2016 2016
(unaudited) (audited)
Net assets GBP60,246,000 GBP50,319,000 GBP58,010,000
Net asset value ("NAV")
per Ordinary Share 98.88p 92.02p 95.21p
Share price at 30 June
2017 97.50p 95.50p 92.50p
(Discount)/premium to NAV (1.40)% 3.78% (2.85)%
Profit/(loss) for the period GBP4,394,000 GBP(2,166,000) GBP1,339,000
Dividend per share declared
in respect of the period
([1]) 3.00p 2.85p 6.00p
Total return per Ordinary
Share (based on NAV) ([2]) +7.16% -4.70% +1.59%
Total return per Ordinary
Share (based on share
price)
([2]) +8.81% -3.15% -3.15%
Ordinary Shares in issue 60,930,764 54,683,222 60,930,764
[1] Only 1.50p of the 3.00p per Ordinary Share dividends
declared out of the profits for the period ended
30 June 2017 had been deducted from the 30 June
2017 NAV as the dividend of 1.50p per Ordinary
Share announced on 19 July 2017, payable to
Shareholders on record at 3 August 2017, and
which will be paid on 25 August 2017, had not
been provided for in these unaudited condensed
half-yearly financial statements at 30 June
2017 as, in accordance with IFRS, it was not
deemed to be a liability of the Company at that
date.
[2] Total return per Ordinary Share has been calculated
by comparing the NAV or share price, as applicable,
at launch with the NAV or share price, as applicable,
plus dividends paid, at the period end.
William Scott, Chairman, commented:
"It was a successful half year. Taking into account
dividends paid, the increase in net assets per
share over the six months net of all expenses was
7.16%. This equates to an annualised rate of 14.83%
p.a., which is comfortably ahead of our long-term
target return of 10% p.a. net of operating expenses.
"The markets in which the Company operates continue
to normalise and regulatory pressure has moderated,
leaving financial institutions with a clearer path
to follow. The process of transitioning to the
new capital bases therefore continues and generates
further opportunities. The Board accordingly continues
to look forward with confidence for the foreseeable
future."
Gildas Surry, Investment Manager, said:
"Over the last six months, several risks have receded
in the banking sector: rates have started to increase,
the Eurozone breakup premium has disappeared after
Macron's election and futures of the riskiest banks
have been resolved. All these developments point
towards a sustained normalisation of the banking
sector in a context of historic levels as well
as types of bank capital.
"Our outlook for the sector remains constructive,
even after the strength of the first half of 2017.
Calls and new issuance will continue. A number
of issuers in the banking sector, whether incumbent
or disruptive players, have been identified as
willing to issue hybrid capital instruments. Insurers
have also begun to share their capital strategy
towards Solvency 2 through their Solvency and Financial
Condition Reporting disclosure. We expect further
attractive opportunities to come from this sector
over the medium term."
Overview and Investment Strategy
General information
Axiom European Financial Debt Fund Limited (the
"Company") was incorporated as an authorised closed-ended
investment company, under the Companies (Guernsey)
Law, 2008 (the "Law") on 7 October 2015 with registered
number 61003. Its Ordinary Shares were admitted
to trading on the Specialist Fund Segment ("SFS")
(formerly the Specialist Fund Market) of the London
Stock Exchange on 5 November 2015 ("Admission").
Investment objective
The investment objective of the Company is to provide
Shareholders with an attractive return, while limiting
downside risk, through investment in the following
financial institution investment instruments:
* Regulatory capital instruments, being financial
instruments issued by a European financial
institution which constitute regulatory capital for
the purposes of Basel I, Basel II or Basel III or
Solvency I or Solvency II;
* Other financial institution investment instruments,
being financial instruments issued by a European
financial institution, including without limitation
senior debt, which do not constitute regulatory
capital instruments; and
* Derivative instruments, being CDOs, securitisations
or derivatives, whether funded or unfunded, linked or
referenced to regulatory capital instruments or other
financial institution investment instruments.
Following the change of investment policy, the
Company is permitted to invest in instruments issued
by, or referenced to, (i) financial institutions
in the EEA (i.e. including countries other than
the UK and the members of the EU, as per the Company's
original investment mandate) and Switzerland and
(ii) entities which are not financial institutions
in the EEA or Switzerland, but which are subsidiaries,
at the time of investment, of such institutions.
Investment policy
The Company seeks to invest in a diversified portfolio
of financial institution investment instruments.
The Company focuses primarily on investing in the
secondary market although instruments have been,
and may also in the future be subscribed in the
primary market where the Investment Manager, Axiom
Alternative Investments SARL ("Axiom"), identifies
attractive opportunities.
The Investment Manager identified a number of instruments
issued by (i) financial institutions in the EEA
(i.e. including countries other than the UK and
the members of the EU, as per the Company's original
investment mandate) and Switzerland and (ii) entities
which are not financial institutions but which
are subsidiaries of such institutions in which
it considered that the Company ought to be permitted
to invest. At the AGM it was resolved that the
Company's investment policy be amended to allow
the Company to invest in such instruments.
The Company invests its assets with the aim of
spreading investment risk.
For a more detailed description of the investment
policy, please see the Company's Prospectus, which
is available on the Company's website (http://axiom-ai.com/web/data/prospectus/ENG/AEFD-prospectus-UK.pdf).
Chairman's Statement
I am pleased to present our report for the half-year
to 30 June 2017.
Results
It was a successful half-year. Taking into account
dividends paid, the increase in net assets per
share over the six months net of all expenses was
7.16%. This equates to an annualised rate of 14.83%
p.a., which is comfortably ahead of our long-term
target return of 10% p.a. net of operating expenses.
In brief, the markets continued their recovery
after their difficult start to 2016. The regulatory
background remained stable and financial institutions
were busy in the process of restructuring their
capital instruments to meet their future regulatory
requirements. Our investment managers, Axiom Alternative
Investments SARL, were active on the Company's
behalf and they give a detailed, comprehensive
report on both the markets and portfolio composition
in the Investment Manager's Report and so I shall
not repeat that here.
The Company reported a net profit after tax for
the period ended 30 June 2017 of GBP4.4 million
(30 June 2016: loss of GBP2.2 million), representing
earnings per Ordinary Share of 7.21p (30 June 2016:
loss per Ordinary Share of 4.11p).
The Company's NAV at 30 June 2017 was GBP60.2 million
(98.88p per Ordinary Share) (31 December 2016:
GBP58.0 million, 95.21p per Ordinary Share).
Dividends
The Company has declared two dividends each of
1.50p per Ordinary Share in relation to the half-year:
one was paid on 12 May and the other, declared
after the balance sheet date, will be paid on 25
August to Shareholders on the register at 4 August.
Together, they total 3.00p per Ordinary Share and
the Company is therefore well on track against
its target of at least 6.00p for the year. During
the period, actual payments of 3.15p were made,
being the 12 May dividend and the 1.65p balancing
dividend in respect of the period from incorporation
to 31 December 2016 which was paid on 24 February
2017.
Placing programme
On 8 May 2017, we refreshed the Placing Programme
prospectus to enable the Company to expand by placing
new shares at not less than the prevailing NAV
(cum income) per share at the time of issue plus
a premium to cover the costs and expenses of the
relevant placing.
Minor amendment to investment policy at AGM 6 April
2017
A minor change to the Company's investment policy
was proposed at the Annual General Meeting on 6
April 2017 to expand slightly the universe of eligible
investments by broadening the definition of European
Financial Institutions to include instruments that
are issued by (i) financial institutions in the
EEA (i.e. including countries other than the UK
and the members of the EU, as per the Company's
original investment mandate) and Switzerland and
(ii) entities which are not financial institutions
but which are subsidiaries of such institutions.
I am pleased to say that the proposal achieved
unanimous support from those Shareholders who voted
at the AGM.
Outlook
The markets in which the Company operates continue
to normalise and regulatory pressure has moderated,
leaving financial institutions with a clearer path
to follow. The process of transitioning to the
new capital bases therefore continues and generates
further opportunities as our investment manager
notes.
The Board accordingly continues to look forward
with confidence for the foreseeable future.
William Scott
Chairman
10 August 2017
Investment Manager's Report
1- Market developments
In January, a strong rebound of the banking sector
continued to be driven by a favourable environment.
As the new Trump administration sets a tone of
greater forbearance, if not a repeal of the regulatory
framework, the Basel Committee struggled to reach
a consensus on RWA floors and postponed its meeting
to March. Objections came from European regulators
as output floors risked undermining some national
models.
Fundamentals improved also as higher rates boosted
bank revenues and market volatility from Q4 2017,
which helped IBs to perform; Unicredit launched
a record EUR13bn capital raise and BCP in Portugal
announced a EUR1.3bn rights issue.
Valuations also received further support from M&A
headlines. In Italy, UBI reached a deal to purchase
three regional banks. Intesa was rumoured to mount
a bid for Generali operations, together with Allianz.
The Novo Banco sale to Lone Star progressed, the
HSH Nordbank sale process was launched, and BAWAG
bid for a German private bank.
In January, new issuance was very active, with
two Additional Tier 1 transactions (Intesa and
Standard Chartered) and one issue of Mutual Certificates
by Rabobank. Six Tier 2 deals were launched and
new Tier 3s were printed by banks in France and,
despite the absence of the relevant law, in Spain.
Danske Bank, Irish Life and Permanent and DNB called
their step-up legacy Tier 1s at the first call
date. Tender offers were announced by Groupama
and Old Mutual.
February was mixed as debt markets suffered from
a widening of French and Italian Treasury yields.
Bank subordinated debt however, remained in strong
demand: legacy instruments, and later in the month
Additional Tier 1s.
Fundamentals continued to improve throughout February
and the annual earnings season showed better asset
quality (loan provisions down, NPL ratios down),
controlled costs (down on an underlying basis)
and sustained revenues despite the 2016 low rate
environment. Highlights included the excellent
results of ABN Amro, De Volksbank, Coventry Building
Society and Erste Bank, though in Italy, the restructuring
process of ailing institutions was taking more
time as the ECB locked horns with the EC on the
scope of Monte dei Paschi's capital plan and a
merger plan was finalised for Veneto Banca and
Vicenza.
Regulation reforms were paused in February as banks
and regulators waited for the outcome of the Basel
meeting in early March and the proposal by EBA
chairman Enria of a new Europe-wide Asset Management
Company for NPLs which did not find any consensus.
In February, new issuances were quiet with one
Barclays AT1 in Sterling at a 7.25% coupon, one
PBB Tier 2 in Euros and Spanish issuers exploring
Tier 2 issuance. However, call activity in relation
to legacy instruments was very high: Barclays (7.1%
Pref, 6.375% UT2), ING (7.2% Pref), SocGen (5.922%,
floating rate T1s), BNP (5.019% T1), Aareal Bank
(7.125% TruPS) and, last but not least, BBVA (two
step-up T1s that had passed their first call date
and traded in the high 80s).
March was a strong month. The Subfin index tightened
by more than 30bp reducing the lag on AT1s, rates
fell back slightly after Trump's failure in repealing
Obamacare, and geopolitical risks towards French
elections receded.
Credit fundamentals continued their progress. Deutsche
Bank announced plans to raise EUR8bn to address
all remaining concerns about its viability, and
Raiffeisen in Austria released strong financials
of its new structure following the merger of RZB
and RBI before AIB closed the earnings season by
showing 200bp of CET1 generated since June, paving
the way for a future IPO.
On the restructuring front, Monte dei Paschi received
approval for its precautionary recapitalisation,
alongside a reduction of the capital to be injected.
Co-operative Bank launched a sale process, Popular
in Spain explored asset sales to strengthen capital,
the sale of Novo Banco became subject to an LME
and Caixa Geral received EC approval to proceed
with its recapitalisation.
Regulatory pressure continued to ease as the Basel
Committee got closer to a compromise on the "output
floors" initially expected to constrain capital
ratios.
In March primary issuance was prevalent with c.USD20bn
of senior Holdcos, nine T2s, five AT1s, including
the first one in Portugal, and the first Restricted
T1 by an insurer.
Prices were again supported by a number of par
calls (Bank of Ireland UK, RBS 5.6457%, BBVA 5.919%,
Lloyds 4.385%) and tenders from Commerzbank, Credit
Suisse, Banco BPM and more importantly Credit Agricole
targeting six legacy T1s, including its 6.637%
reset at a cheap USD3mL+123bp at a EUR10y+2.5bp.
Macron's victory in the first round of the French
elections was the catalyst for April's strong relief
rally.
While the uncertainty of the polls kept the Subfin
above 200bp, it tightened by more than 30bp in
the last week. Bank equities jumped 6% and AT1s,
led by French names, surged above their historical
highs. Even if the recent move was quick, financials
maintained their lag against corporates. As a comparison,
in April, EUR HY Corpo (BEUH) stood at 2.7% while
EUR HY Fins (BEUHFI) was 3.7%.
The surprise announcement of general elections
in the UK to strengthen Theresa May's government
triggered a reaction of cohesion across the 27
other EU members and adding further uncertainty
to Brexit negotiations. Despite this however, cash
began to be deployed as, driven by fundamentals
taking precedence over political uncertainties,
valuations found new clearing levels.
The Q1 earnings season contributed to support the
rally with profit increases from Swedish banks
and strong top-line revenues from Santander, BBVA
and Lloyds, while Credit Suisse confirmed its plan
to raise CHF 4bn of new equity.
Deutsche Bank completed its EUR8bn raise and looked
to turn its focus towards profits and growth. Banco
Popular however was forced to restate some provisions
related to its NPLs and, following management changes,
undertook a structural review to maintain its capital
flexibility via asset sales or even a possible
merger. In Italy, the sector benefited from precautionary
recapitalisations being rumoured for Veneto Banca
and Popolare di Vicenza as the framework was increasingly
seen by regulatory authorities as an alternative
tool to resolution, under the condition that the
affected banks are solvent.
In April, primary issuance was limited to two new
AT1 deals by Erste Bank and Santander, both limited
in size, and one Tier 2 by Credito Valtellinese.
Credit Suisse called two legacy T1s in USD.
May started with Emmanuel Macron's victory in the
second round of the French elections, continuing
April's positive trend and supporting the banking
sector overall.
The primary pipeline was active in AT1s with HSBC,
BBVA, Unicredit and Sabadell's inaugural deal.
In the last week of the month, AT1 valuations dropped
from their highs as the EBA released an opinion,
although purely consultative, on the redrafting
of the CRD/CRR package to prevent any the distribution
priority for AT1s under a breach of the Combined
Buffer.
At the instrument level, developments were more
mixed. Legacy instruments benefited from redemptions
of bonds trading below par (Deutsche Pfandbriefbank,
Banco BPM and Deutsche Postbank) and the announcement
by French mutual BPCE of its MREL issuance policy
and the subsequent call of its discounted legacy
bonds. RBI and Crédit Logement though refrained
from clarifying their capital strategy towards
their legacy T1s.
Towards the end of month, in Spain, the situation
of Banco Popular deteriorated further as the poor
handling of the provision needs combined with the
lack of concrete actions towards asset sales or
capital raising, increased the pressure on its
management to deliver on the M&A process.
Shortly after at the start of June, the Single
Resolution Board decided to trigger the resolution
based on rapidly deteriorating liquidity and transfer
the bank to Banco Santander. To address the capital
shortfall, all the shares and the AT1 instruments
were written down and the Tier 2 converted into
shares to be transferred to Banco Santander S.A.
for a nil consideration. Santander will integrate
Popular's operations after booking EUR7.9bn of
provisions and raising EUR7bn of equity.
As recently as the week before, Banco Popular had
communicated its needs for additional provisions
towards the low end of the EUR1.5-2.0bn range.
Our estimates stood significantly higher between
EUR3.5bn and EUR4bn and our base scenario assumed
the conversion of the two Coco AT1s only, but excluding
the legacy T1s and the T2s, alongside a low bid
from Santander around 0.15% of Banco Popular's
book value.
The actual amount of EUR7.9bn in provisions, and
the undifferentiated treatment between the various
debt formats (T2 treated similarly as AT1 with
a value reduced to zero) was a heavy downside outcome
to an extent which had been largely unexpected
by analysts. The ECB's view on the liquidity was
also controversial in light of a EUR20bn portfolio
of securities available for central bank funding
and the Liquidity Coverage ratio of 146% released
with Q1 results on 5 May. Santander leveraged its
sole bidder position, without any competition,
to impose its terms on Popular bondholders, ultimately
extracting the maximum value from the acquisition:
c. EUR950 million of additional net profit is expected
by 2020 alongside a 3.4% increase in RoTE to 13%.
June saw two further resolutions in Italy with
Veneto Banca and Popolare di Vicenza; ending with
adverse moves in interest rates triggered by further
tapering rhetoric from central bankers.
While AT1s and equities rebounded in a sign of
relief after Banco Popular, subordinated debt saw
a strong dispersion with a risk-off move on subordinated
instruments issued by medium-sized banks with significant
NPL ratios and limited market access.
The most significant moves took place in the senior
debt. Not only were senior unsecured bonds not
impacted by either resolution but the announcement
of other restructurings like the Co-operative Bank
in the UK, or Monte dei Paschi in Italy, confirmed
the protection of senior liabilities.
Senior debt valuations got further supported by
the EU council's decision to fast track legislation
aimed at the creation of non-preferred senior bank
debt. This results in a buffer protecting the existing
senior debt, alongside a structural protection
for the operational subsidiaries.
At the same time, the announcement that Holdcos
will replace Opcos in the Itraxx financials index
from September onwards created a technical squeeze
where Snrfin and Subfin indices tightened both
by a historical 20bp over the month.
Fundamentals continued to improve with rating upgrades
(RBS, Sabadell, Bank of Ireland, AIB, de Volksbank),
new IPOs like AIB or Unicaja and more bad loan
disposals, in Italy in particular with Banco BPM,
Credito Valtellinese and Banca Carige. This provided
a favourable backdrop for the issue of a new AT1
by HSBC and two inaugural AT1s by Caixabank and
RBI. Legacy instruments were also supported by
the call of BPCE EUR CMS, after a cryptic announcement
in their Q1 results, which triggered a lagging
rally in CMS-linked and other floating discounted
instruments such as Crédit Logement.
2- Investment Objective and Strategy
AEFD is a closed-ended fund investing in liabilities
issued by European financial institutions, predominantly
legacy Tier 1s, Tier 2s, and Additional Tier 1s
across five sub-strategies:
* Liquid Relative Value: instruments issued by large
and strong quality institutions, with significant
liquidity. These can be purchased on either primary
or secondary markets.
* Less Liquid Relative Value: instruments issued by
large and strong quality institutions, with limited
liquidity due to past tenders or complex features
(secondary market).
* Restructuring: instruments issued by institutions in
preparation or implementation of a restructuring
process (secondary market).
* Special Situations: instruments issued by entities in
run-off, under a merger process or split between
several entities (secondary market).
* Midcap Origination: instruments issued by small
institutions or small subsidiaries of larger
institutions (primary market).
3- Trade activity and positioning
January: exposure to floating rate instruments
increases
* Liquid Relative Value: the Company took part in the
new issues by Intesa, StanChart and Rabobank, and
bought French AT1s. The Company held Groupama and Old
Mutual into the exchanges.
* Less Liquid Relative Value: the Company sold
long-duration Sterling legacy instruments as Sterling
rate increases had not impacted cash prices yet.
* Special Situations: the Company increased its
holdings of discount perpetuals on banks in Austria,
Netherlands and Germany and insurance in France.
* Restructuring: the Company sold Monte seniors at
98.25 (bought at 94.75 in December) and bought
Deutsche Bank Additional Tier 1 as litigations were
resolved.
* Midcap Origination: the Company bought a rare Tier 2
instrument issued by a mutual insurer in Spain.
February: SocGen Floating Perp redeems
The Company continued to benefit from calls (SocGen
FRN was in the top 3 holdings), the rally in both
legacy Tier 1 instruments (floaters in particular)
and AT1s (30% in the portfolio), and lost on its
exposures to Italian banks.
* Liquid Relative Value: the Company sold its positions
on French AT1s and switched into UK and German
issuers, as the uncertainty around the French
elections grew.
* Less Liquid Relative Value: following the redemptions
by Barclays and BBVA, the Company sold its Barclays
preference shares (above par) and increased its
holding in Santander (the same format as BBVA's that
were called). The Company sold its position on HSBC
discounted bonds.
* Special Situations: the Company increased its holding
in Aareal FRN, as the issuer announced the active
management of its legacy capital structure.
* Restructuring: the Company reduced its holdings in
Deutsche Bank AT1s (at 91.5 bought at 87) and
Unicredit AT1s, following the execution of the
capital raise.
* Midcap Origination: the Company bought a new Tier 2
issued by Deutsche Pfandbriefbank, which came to the
market ahead of the expected redemption of its legacy
Tier 1.
March: Bank of Ireland call
The Company continued to benefit from calls: it
held the next RBS T1s approaching their call, the
BBVA 5.919% and the rare Bank of Ireland UK instrument
(only GBP32 million outstanding).
* Liquid Relative Value: the Company participated in
the new AT1 issue by Santander UK and also purchased
Spanish Tier 2 instruments.
* Less Liquid Relative Value: the Company increased its
holdings of Fixed-to-Fixed Perpetuals and legacy Tier
1s issued by smaller UK issuers.
* Special Situations: the Company again increased its
exposure to specific instruments whose capital
recognition had been confirmed in the latest annual
disclosure by banks.
* Restructuring: the Company remained exposed to Monte
dei Paschi, Banco Popular and Novo Banco's insurer
but no longer exposed to Co-operative Bank.
Midcap Origination: the Company participated in
the new AT1 issue by Caixa Geral.
April: French banks post Macron's election perform
The Company benefited strongly from the market
performance through its cash being fully deployed
and the appreciation of its CDS positions on French
banks.
* Liquid Relative Value: the Company reduced its
holdings in Commerzbank and Groupama and participated
in the new AT1 issue by Erste Bank. It sold its
remaining position in Barclays AT1 at 102 (bought at
99.10 in November 2015).
* Less Liquid Relative Value: the Company increased
further its holdings of a French Fixed-to-Fixed and a
legacy step-up issued by a retail bank in Hungary.
* Special Situations: the Company increased slightly
its exposure to RBI in Austria, in anticipation of a
future exchange.
* Restructuring: the Company sold a legacy Tier 1 in
Deutsche Post Bank coming up for call above 99.00
(bought at 94.00 in February 2016) and increased its
holding on Liverpool Victoria subordinated bonds.
* Midcap Origination: the Company participated in the
new T2 issue by Credito Valtellinese.
May: redemptions continue and BPCE tenders its
CMS linkers
The Company continued to benefit strongly from
the market performance while keeping its AT1 exposure
in the Liquid Relative Value bucket at a low level
of 18.6%. Specifically:
* Liquid Relative Value: the Company sold its Lloyds
AT1s and participated in the new AT1 issues in
Unicredit and Sabadell, as well as BPER T2s.
* Less Liquid Relative Value: the Company built a
holding in BPCE CMS ahead of their future call.
* Special Situations: the Company sold its holding in
Old Mutual the day after the AGM presentation where
management suggested the bonds could stay under a new
South Africa-listed sub-holding.
* Restructuring: the Company started managing down its
exposure to Banco Popular on 11 May.
* Midcap Origination: the Company participated as one
of the anchor investors in the AT1 issued by One
Savings.
June: resolutions get implemented
The Company offset its exposure to Banco Popular's
resolution with significant gains on senior and
sub Opco positions that were put in place via CDS
on single names (including Banco Popular) and Itraxx
indices, in anticipation of the preferential treatment
of seniors, whether through a resolution or the
new non-preferred legislation. Specifically:
* Liquid Relative Value: the Company sold its AT1 and
T2 positions in medium sized issuers in Spain and
Italy (Sabadell, Caixabank, Popolare Emilia Romagna)
and took part in RBI's inaugural AT1.
* Less Liquid Relative Value: the Company increased its
holding in BPCE CMS ahead of its future call, and
increased its portion of Fixed-to-Fixed instruments.
* Special Situations: the Company increased its holding
in HSBC discos and DPB bonds issued via SPVs. After
the new RBI AT1, it sold RZB CMS above 92.00 (bought
between 63.00 and 85.50 over the last year).
* Restructuring: the Company closed the month with c.4%
exposure to Popolare di Vicenza seniors, ahead of
their transfer to Intesa. It switched its exposure to
Co-operative Bank seniors around 98.00 (bought at
86.5 late May) into a smaller amount of Co-operative
Bank subordinated bonds.
4- Portfolio (as at 30 June 2017)
1- Strategy Allocation (as a % of investments
held)
Liquid Relative
Value 16.7%
Less Liquid Relative
Value 44.6%
Restructuring 16.8%
Special Situations 15.2%
Midcap Origination 12.7%
2- Currency breakdown (as a % of investments
held, excluding cash)
EUR 53.0%
GBP 23.0%
USD 21.8%
DKK 1.1%
CAD 1.1%
3- Portfolio Breakdown (as a % of investments
held, excluding cash)
By rating By subordination
Additional Tier
A 5.2% 1 21.3%
BBB 26.7% Legacy Tier 1 52.7%
BB 45.8% Tier 2 22.2%
B 10.7% Senior 3.8%
CCC and below 11.5%
By maturity By country
<1 year 17.7% UK 28.4%
1-3 16.2% France 21.4%
3-5 45.7% Germany 13.7%
5-7 5.4% Italy 10.0%
7-10 7.9% Netherlands 7.4%
>10 7.1% Spain 6.4%
Austria 3.3%
Denmark 3.3%
Portugal 2.8%
Ireland 1.1%
Luxembourg 0.8%
Hungary 0.5%
Greece 0.5%
Jersey 0.3%
4- Specific exposures
Security Strategy % of
NAV
Less Liquid
BPCE cms Perp Relative Value 6.5%
Onesavings Perp-22 Midcap Origination 5.3%
Less Liquid
Achmea 6% Perp Relative Value 4.6%
Less Liquid
BNP Paribas 4.875% Perp Relative Value 4.5%
Liquid Relative
Coventry BS Perp-19 Value 3.4%
Aareal FRN Perp Special Situation 3.3%
Liquid Relative
Commerzbank 2031 Value 3.2%
HSBC FRN Perp Special Situation 2.8%
Less Liquid
Onesavings Perp-16 Relative Value 2.7%
Less Liquid
Credit Logement FRN Relative Value 2.4%
5- Company metrics
Share price and GBp Portfolio information
NAV
Share price (mid) 97.50 Modified duration(*) 1.26
NAV per share Sensitivity
(weekly) 98.88 to credit(*) 2.97
Dividends paid
over last 12mths 6.15 Positions 82
Shares in issue 60,930,764 Average price 94.58
Market capitalisation
(GBP mn) 59.407 Running yield 5.60%
Total net assets
(GBP mn) 60.246 Yield to perpetuity(*) 4.85%
(Discount) /
premium (1.40)% Yield to call(*) 10.21%
======================= =========== ======================= =======
As of 30 June 2017:
*"Modified duration" measures the sensitivity of
bond prices to interest rates
"Sensitivity to credit" measures the sensitivity
of bond prices to credit spreads
"Yield to call" is the yield of the portfolio at
the expected repayment date of the bonds
"Yield to perpetuity" is the yield of the portfolio
assuming that securities are not repaid but kept
outstanding to perpetuity.
Total performance
3 months 6 months 1 year Since inception
2.32% 7.16% 14.14% 8.55%
Monthly Performance - Total Shareholder Return
(NAV plus dividends, per share)
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Annual
% % % % % % % % % % % % %
2015 0.19 -1.48 -1.29
2016 -4.02 -4.59 3.57 1.16 2.62 -1.97 2.83 1.69 -0.21 2.06 -1.60 1.91 2.92
2017 2.67 0.93 1.12 2.01 1.72 -1.41 7.16
6- NAV evolution
Share price
Share price (mid) +
Date NAV (mid) NAV + dividends dividends
05/11/2015 97.97 101.50 97.97 101.50
27/11/2015 98.19 101.50 98.19 101.50
31/12/2015 96.74 101.50 96.74 101.50
29/01/2016 92.85 101.50 92.85 101.50
26/02/2016 88.24 101.25 88.59 101.60
24/03/2016 91.39 96.50 91.74 96.85
29/04/2016 92.45 96.50 92.80 96.85
27/05/2016 93.87 95.50 95.22 96.85
30/06/2016 92.02 95.50 93.37 96.85
29/07/2016 94.62 93.50 95.97 94.85
26/08/2016 94.72 94.50 97.57 97.35
30/09/2016 94.52 95.50 97.37 98.35
28/10/2016 96.47 95.50 99.32 98.35
25/11/2016 93.43 93.50 97.78 97.85
31/12/2016 95.21 92.50 99.56 96.85
31/01/2017 97.75 92.50 102.10 96.85
28/02/2017 97.01 95.00 103.01 101.00
31/03/2017 98.10 100.50 104.10 106.50
28/04/2017 100.07 99.50 106.07 105.50
31/05/2017 100.29 101.50 107.79 109.00
30/06/2017 98.88 97.50 106.38 105.00
7- Outlook
Over the last six months, several risks have receded
in the banking sector: rates have started to increase,
the Eurozone breakup premium disappeared after
Macron's election and certain issues with the riskiest
banks have been resolved. All these developments
point towards a sustained normalisation of the
banking sector in a context of historic levels
as well as types of bank capital.
The recycling of old capital structures continues.
Legacy instruments are either called, as we saw
for Socgen, Bank of Ireland, Banco BPM, BBVA, and
BPCE, or tendered like Groupama, Old Mutual, and
Credit Agricole. Furthermore, new instruments are
issued: AT1s or T2s by frequent issuers but also
smaller names like OneSavings Bank, Deutsche Pfandbriefbank,
Credito Emiliano.
Our outlook for the sector remains constructive,
even after the strength of the first half of 2017.
Calls (RBI expected in Q4), tenders (HSBC), and
new issuance will continue. A number of issuers
in the banking sector, whether incumbent or disruptive
players, have been identified as willing to issue
hybrid capital instruments.
Insurers have also begun to share their capital
strategy towards Solvency 2 through their Solvency
and Financial Condition Reporting disclosure. We
expect further attractive opportunities to come
from this sector over the medium term.
Gildas Surry
Axiom Alternative Investments SARL
10 August 2017
Unaudited Condensed Statement of Comprehensive Income
for the six months ended 30 June 2017
Period Period
from 1 from 7
January October
2017 to 2015 to
30 June 30 June
Note 2017 (unaudited) 2016 (unaudited)
GBP'000 GBP'000
Income
Bond income 1,251 2,067
Credit default swap income 364 18
Bank interest receivable 5 -
------------ ------------
Total income 1,620 2,085
------------ ------------
Investment gains and losses
on investments held at fair
value through profit or loss
Realised gains on disposal
of bonds 12 2,571 71
Movement in unrealised (losses)/gains
on bonds 12 (2,142) 1,637
Realised gains/(losses) on
derivative financial instruments 15 431 (2,016)
Movement in unrealised gains/(losses)
on derivative financial instruments 15 2,010 (2,979)
------------ ------------
Total investments gains and
losses 2,870 (3,287)
------------ ------------
Expenses
Investment management fee 8a (213) (210)
Administration fee 8b (61) (80)
Directors' fees 8f (47) (62)
Other expenses 9 (137) (214)
------------ ------------
Total expenses (458) (566)
------------ ------------
Profit/(loss) from operating
activities before gains and
losses on foreign currency
transactions 4,032 (1,768)
Gain/(loss) on foreign currency 395 (385)
------------ ------------
Profit/(loss) from operating
activities after gains and
losses on foreign currency
transactions and before taxation 4,427 (2,153)
------------ ------------
Taxation 10 (33) (13)
------------ ------------
Profit/(loss) for the period
attributable to the Owners
of the Company 4,394 (2,166)
------------ ------------
Earnings/(loss) per Ordinary
Share - basic and diluted 11 7.21p (4.11)p
------------ ------------
All of the items in the above statement are derived
from continuing operations.
The accompanying notes form an integral part of
these unaudited condensed half-yearly financial
statements.
These financial statements are unaudited and are
not the Company's statutory financial statements.
Unaudited Condensed Statement of Changes in Equity
for the six months ended 30 June 2017
Share Distributable
capital reserves Total
Note (unaudited) (unaudited) (unaudited)
GBP'000 GBP'000 GBP'000
At 1 January 2017 - 58,010 58,010
Profit for the period - 4,394 4,394
Contributions by and distributions
to Owners
Share issue costs 18 - (239) (239)
Dividends paid 6 - (1,919) (1,919)
------------ ------------ ------------
At 30 June 2017 - 60,246 60,246
------------ ------------ ------------
Unaudited Condensed Statement of Changes in Equity
for the period from 7 October 2015 (date of incorporation)
to 30 June 2016
Share Distributable
capital reserves Total
Note (unaudited) (unaudited) (unaudited)
GBP'000 GBP'000 GBP'000
Opening balance at 7 October - - -
2015
Loss for the period from
incorporation to 30 June
2016 - (2,166) (2,166)
Contributions by and distributions
to Owners
Ordinary Shares issued 18 - 54,289 54,289
Share issue costs - (1,080) (1,080)
Dividends paid 6 - (724) (724)
------------ ------------ ------------
At 30 June 2016 - 50,319 50,319
------------ ------------ ------------
The accompanying notes form an integral part of
these unaudited condensed half-yearly financial
statements.
These financial statements are unaudited and are
not the Company's statutory financial statements.
Unaudited Condensed Statement of Financial Position
as at 30 June 2017
30 June 31 December
2017 2016
Note (unaudited) (audited)
GBP'000 GBP'000
Non-current assets
Investment in bonds at fair 12,
value through profit or loss 16 59,867 49,145
------------ ------------
Current assets
Collateral accounts for derivative
financial instruments at fair
value through profit or loss 13 5,374 4,548
Derivative financial assets
at fair value through profit
or loss 15 800 207
Other receivables and prepayments 14 838 825
Cash and cash equivalents - 6,152
------------ ------------
Total current assets 7,012 11,732
------------ ------------
Total assets 66,879 60,877
------------ ------------
Current liabilities
Derivative financial liabilities
at fair value through profit
or loss 15 (3,022) (2,626)
Other payables and accruals 16 (331) (241)
Cash and cash equivalents (3,280) -
------------ ------------
Total liabilities (6,633) (2,867)
------------ ------------
Net assets 60,246 58,010
------------ ------------
Share capital and reserves
Share capital 18 - -
Distributable reserves 60,246 58,010
------------ ------------
Total equity holders' funds 60,246 58,010
------------ ------------
Net asset value per Ordinary
Share: basic and diluted 19 98.88p 95.21p
These unaudited condensed half-yearly financial
statements were approved by the Board of Directors
on 10 August 2017 and were signed on its behalf
by:
William Scott John Renouf
Chairman Director
10 August 2017 10 August 2017
The accompanying notes form an integral part of
these unaudited condensed half-yearly financial
statements.
These financial statements are unaudited and are
not the Company's statutory financial statements.
Unaudited Condensed Statement of Cash Flows
for the six months ended 30 June 2017
Period Period
from 1 from 7
January October
2017 to 2015 to
30 June 30 June
2017 2016
Note (unaudited) (unaudited)
GBP'000 GBP'000
Cash flows from operating activities
Net profit/(loss) before taxation 4,427 (2,153)
Adjustments for:
Foreign exchange movements (395) 385
Realised gains on bonds 12 (2,571) (71)
Movement in unrealised losses/(gains)
on bonds 12 2,142 (1,637)
Realised (gains)/losses on derivative
financial instruments 15 (431) 2,016
Movement in unrealised (gains)/losses
on derivative financial instruments 15 (2,010) 2,979
Increase in operating assets:
Payment to collateral accounts
for derivative financial instruments 13 (826) (1,714)
Purchase of bonds 12 (76,856) (85,517)
Sale of bonds 12 66,565 36,563
Increase in operating liabilities:
Premiums received from selling
credit default swap agreements 15 1,402 634
Premiums paid on buying credit
default swap agreements 15 (1,705) -
Purchase of foreign currency
derivatives 15 (90,777) (73,920)
Close-out of foreign currency
derivatives 15 90,279 72,018
Purchase of bond futures 15 1,068 1,377
Sale of bond futures 15 (990) (1,343)
Proceeds from sale and repurchase
agreements 15 8,043 5,918
Payments to close out sale and
repurchase agreements 15 (5,078) (3,554)
------------ ------------
Net cash outflow from operating
activities before working capital
changes (7,713) (48,019)
Increase in other receivables
and prepayments (13) (815)
Increase in other payables and
accruals 43 236
Taxation paid 10 (33) (13)
------------ ------------
Net cash outflow from operating
activities (7,716) (48,611)
Cash flows from financing activities
Proceeds from issue of Ordinary
Shares - 54,289
Share issue costs paid (192) (1,080)
Dividends paid 6 (1,919) (724)
------------ ------------
Net cash (outflow)/inflow from
financing activities (2,111) 52,485
------------ ------------
(Decrease)/increase in cash
and cash equivalents (9,827) 3,874
Cash and cash equivalents brought
forward 6,152 -
Effect of foreign exchange on
cash and cash equivalents 395 (385)
------------ ------------
Cash and cash equivalents carried
forward (3,280) 3,489
------------ ------------
Supplemental disclosure of cash
flow information
Cash paid during the period
for interest 989 1,386
Cash received during the period
for interest 2,595 2,614
The accompanying notes form an integral part of
these unaudited condensed half-yearly financial
statements.
These financial statements are unaudited and are
not the Company's statutory financial statements.
Notes to the Unaudited Condensed Half-Yearly Financial
Statements
for the six months ended 30 June 2017
1. General information
The Company was incorporated as an authorised closed-ended
investment Company, under the Law on 7 October
2015 with registered number 61003. Its Ordinary
Shares were admitted to trading on the Specialist
Fund Segment of the London Stock Exchange on 5
November 2015.
Investment objective
The investment objective of the Company is to provide
Shareholders with an attractive return, while limiting
downside risk, through investment in the following
financial institution investment instruments:
* Regulatory Capital Instruments, being financial
instruments issued by a European financial
institution which constitute regulatory capital for
the purposes of Basel I, Basel II or Basel III or
Solvency I or Solvency II;
* Other financial institution investment instruments,
being financial instruments issued by a European
financial institution, including without limitation
senior debt, which do not constitute Regulatory
Capital Instruments; and
* Derivative Instruments, being CDOs, securitisations
or derivatives, whether funded or unfunded, linked or
referenced to Regulatory Capital Instruments or Other
financial institution investment instruments.
Following the change of investment policy, the
Company is permitted to invest in instruments issued
by, or referenced to, (i) financial institutions
in the EEA (i.e. including countries other than
the UK and the members of the EU, as per the Company's
original investment mandate) and Switzerland and
(ii) entities which are not financial institutions
in the EEA or Switzerland, but which are subsidiaries,
at the time of investment, of such institutions.
Investment policy
The Company seeks to invest in a diversified portfolio
of financial institution investment instruments.
The Company focuses primarily on investing in the
secondary market although instruments may also
be subscribed in the primary market where the Investment
Manager, Axiom, identifies attractive opportunities.
The Investment Manager identified a number of instruments
issued by (i) financial institutions in the EEA
(i.e. including countries other than the UK and
the members of the EU, as per the Company's original
investment mandate) and Switzerland and (ii) entities
which are not financial institutions but which
are subsidiaries of such institutions in which
it considered that the Company ought to be permitted
to invest. At the AGM it was resolved that the
Company's investment policy be amended to allow
the Company to invest in such instruments.
The Company invests its assets with the aim of
spreading investment risk.
2. Statement of compliance
a) Basis of preparation
These unaudited condensed half-yearly financial
statements present the results of the Company for
the six months ended 30 June 2017. These unaudited
condensed half-yearly financial statements have
been prepared in accordance with the Disclosure
and Transparency Rules of the Financial Conduct
Authority and International Accounting Standard
34, Interim Financial Reporting, as adopted by
the European Union.
The unaudited condensed half-yearly financial statements
for the period ended 30 June 2017 have not been
audited or reviewed by the Company's auditors and
do not constitute statutory financial statements.
They have been prepared on the same basis as the
Company's annual financial statements.
These unaudited condensed half-yearly financial
statements were authorised for issuance by the
Board of Directors on 10 August 2017.
b) Going concern
After making reasonable enquiries, and assessing
all data relating to the Company's liquidity, including
its income stream and Level 1 investments, the
Directors have a reasonable expectation that the
Company has adequate resources to continue in operational
existence for the foreseeable future and do not
consider there to be any threat to the going concern
status of the Company. Therefore, the unaudited
condensed half-yearly financial statements have
been prepared on a going concern basis.
c) Basis of measurement
These unaudited condensed half-yearly financial
statements have been prepared on a historical cost
basis, except for financial instruments (including
derivative financial instruments), which are measured
at fair value through profit or loss. These unaudited
condensed half-yearly financial statements have
been prepared on a going concern basis.
d) Use of estimates and judgements
The preparation of financial statements in conformity
with IFRSs requires management to make judgements,
estimates and assumptions that affect the application
of policies and the reported amounts of assets
and liabilities, income and expenses. The estimates
and associated assumptions are based on historical
experience and various other factors that are believed
to be reasonable under the circumstances, the results
of which form the basis of making judgements about
carrying values of assets and liabilities that
are not readily apparent from other sources. Actual
results may differ from these estimates.
The estimates and underlying assumptions are reviewed
on an ongoing basis. Revisions to accounting estimates
are recognised in the period in which the estimate
is revised, if the revision affects only that period,
or in the period of the revision and future periods,
if the revision affects both current and future
periods.
Judgements made by management in the application
of IFRSs that have a significant effect on the
unaudited condensed half-yearly financial statements
and estimates with a significant risk of material
adjustment in the next year are discussed in note
3.
3. Significant accounting policies
a) Income and expenses
Bank interest, bond income and credit default swap
income is recognised on a time-proportionate basis.
Dividend income is recognised when the right to
receive payment is established.
All expenses are recognised on an accruals basis.
All of the Company's expenses (with the exception
of share issue costs, which are charged directly
to the distributable reserve) are charged through
the Statement of Comprehensive Income in the period
in which they are incurred.
b) Transaction costs
Transaction costs incurred on the acquisition or
disposal of a financial investment designated at
fair value through profit or loss will be charged
through the Statement of Comprehensive Income in
the period in which they are incurred.
c) Foreign currency
Foreign currency transactions are translated into
Sterling using the exchange rates prevailing at
the dates of the transactions. Foreign exchange
gains and losses resulting from the settlement
of such transactions and from the translation at
period-end exchange rates of monetary assets and
liabilities denominated in foreign currencies are
recognised in the Statement of Comprehensive Income.
The exchange rates used by the Company as at 30
June 2017 were GBP1/EUR1.1398, GBP1/US$1.3025,
GBP1/DKK8.4792, GBP1/CA$1.6883 and GBP1/SEK10.9745.
d) Taxation
The Directors intend to conduct the Company's affairs
such that the Company continues to qualify for
exemption from Guernsey taxation.
Investment income is recorded gross of applicable
taxes and any tax expenses are recognised through
the Statement of Comprehensive Income as incurred.
The Company holds investments in several European
countries, in some jurisdictions, investment income
and capital gains are subject to withholding tax
deducted at the source of the income. The Company
presents the withholding tax separately from the
gross investment income in the Statement of Comprehensive
Income. For the purpose of the Statement of Cash
Flows, cash inflows from investments are presented
net of withholding taxes when applicable.
e) Financial assets and liabilities
The financial assets and liabilities of the Company
are investments in bonds at fair value through
profit or loss, collateral accounts for derivative
financial instruments, cash and cash equivalents,
other receivables, derivative financial instruments
and other payables. These financial instruments
are designated at fair value through profit or
loss upon initial recognition on the basis that
they are part of a group of financial assets which
are managed and have their performance evaluated
on a fair value basis, in accordance with investment
strategies and risk management of the Company.
Recognition
The Company recognises a financial asset or a financial
liability when, and only when, it becomes a party
to the contractual provisions of the instrument.
Purchases and sales of financial assets that require
delivery of assets within the time frame generally
established by regulation or convention in the
marketplace are recognised on the trade date, i.e.
the date that the Company commits to purchase or
sell the asset.
Derecognition
A financial asset (or, where applicable, a part
of a financial asset or part of a group of similar
assets) is derecognised where:
* The rights to receive cash flows from the asset have
expired; or
* The Company has transferred its rights to receive
cash flows from the asset or has assumed an
obligation to pay the received cash flows in full
without material delay to a third party under a
"pass-through" arrangement; and
* Either (a) the Company has transferred substantially
all the risks and rewards of the asset, or (b) the
Company has neither transferred nor retained
substantially all the risks and rewards of the asset,
but has transferred control of the asset.
When the Company has transferred its rights to
receive cash flows from an asset (or has entered
into a pass-through arrangement) and has neither
transferred nor retained substantially all the
risks and rewards of the asset nor transferred
control of the asset, the asset is recognised to
the extent of the Company's continuing involvement
in the asset.
The Company derecognises a financial liability
when the obligation under the liability is discharged,
cancelled or expires.
Initial measurement
Financial assets and financial liabilities at fair
value through profit or loss are recorded in the
Statement of Financial Position at fair value.
All transaction costs for such instruments are
recognised directly in the Statement of Comprehensive
Income.
Subsequent measurement
After initial measurement, the Company measures
financial assets which are classified at fair value
through profit or loss, at fair value. Subsequent
changes in the fair value of those financial instruments
are recorded in net gain or loss on financial assets
and liabilities at fair value through profit or
loss. Interest and dividend earned or paid on these
instruments are recorded separately in interest
income or expense and dividend income or expense.
Net gain or loss on financial assets and financial
liabilities at fair value through profit or loss
The Company records its transactions in bonds and
the related revenue and expenses on a trade date
basis. Unrealised gains and losses comprise changes
in the fair value of financial instruments at the
period end. These gains and losses represent the
difference between an instrument's initial carrying
amount and disposal amount, or cash payment on,
or receipts from derivative contracts.
Offsetting of financial instruments
Financial assets and financial liabilities are
reported net by counterparty in the Statement of
Financial Position, provided that the legal right
of offset exists, and is not offset by collateral
pledged to or received from counterparties.
f) Derivative financial instruments
Derivative financial instruments, including credit
default swap agreements, foreign currency forward
contracts, bond future contracts and sale and repurchase
agreements are recognised initially, and are subsequently
measured at fair value. Derivative financial instruments
are classified as assets when their fair value
is positive or as liabilities when their fair value
is negative. Derivative assets and liabilities
arising from different transactions are offset
only if the transactions are with the same counterparty,
a legal right of offset exists, and the parties
intend to settle the cash flows on a net basis.
Fair value movements on derivative financial instruments
are recognised in the Statement of Comprehensive
Income in the period in which they arise.
g) Offsetting of derivative assets and liabilities
IFRS 7, Financial Instruments: Disclosures, requires
an entity to disclose information about offsetting
rights and related arrangements. The disclosures
in note 15 provide users with information to evaluate
the effect of netting arrangements on an entity's
financial position. The disclosures are required
for all recognised financial instruments that could
be offset in accordance with International Accounting
Standard ("IAS") 32, Financial Instruments Presentation.
The disclosures also apply to recognised financial
instruments that are subject to an enforceable
master netting agreement or similar agreement,
irrespective of whether these are offset in accordance
with IAS 32.
h) Collateral accounts for derivative financial
instruments at fair value through profit or loss
Collateral accounts for derivative financial instruments
at fair value through profit or loss comprises
cash balances held at the Company's depositary
and the Company's clearing brokers and cash collateral
pledged to counterparties related to derivative
contracts. Cash that is related to securities sold,
not yet purchased, is restricted until the securities
are purchased. Financial instruments held within
the margin account consist of cash received from
brokers to collateralise the Company's derivative
contracts and amounts transferred from the Company's
bank account.
i) Receivables and prepayments
Receivables are carried at the original invoice
amount, less allowance for doubtful receivables.
Provision is made when there is objective evidence
that the Company will be unable to recover balances
in full. Balances are written-off when the probability
of recovery is assessed as being remote.
There are instruments in the portfolio that do
not pay any distributions because the payment remains
at the discretion of the issuer, or is under regulatory
or state aid restrictions. These are not classified
as "bad debts".
With respect to senior debt only:
* If bond interest has not been received within 30
calendar days of the expected pay date, unless there
is good reason, 50% of the interest will be provided
against; and
* If bond interest has not been received within 60
calendar days of the expected pay date, unless there
is good reason, 100% of the interest will be provided
against.
Bad debts will be considered on an investment by
investment basis and no general provision will
be made.
j) Cash and cash equivalents
Cash in hand and in banks and short-term deposits
which are held to maturity are carried at cost.
Cash and cash equivalents are defined as cash in
hand, demand deposits and short-term, highly liquid
investments readily convertible to known amounts
of cash and subject to insignificant risk of changes
in value.
k) Payables and accruals
Trade and other payables are carried at payment
or settlement amounts. Where the time value of
money is material, payables are carried at amortised
cost. When payables are received in currencies
other than the reporting currency, they are carried
forward, translated at the rate prevailing at the
period end date.
l) Share capital
Ordinary Shares are classified as equity. Incremental
costs directly attributable to the issue of Ordinary
Shares are recognised as a deduction from equity.
When share capital recognised as equity is repurchased,
the amount of the consideration paid, which includes
directly attributable costs, is recognised as a
deduction from equity. Repurchased shares that
are classified as Treasury Shares are presented
as a deduction from equity. When Treasury Shares
are sold or subsequently reissued, the amount received
is recognised as an increase in equity and the
resulting surplus or deficit is transferred to/from
retained earnings.
Funds received from the issue of Ordinary Shares
are allocated to share capital, to the extent that
they relate to the nominal value of the Ordinary
Shares, with any excess being allocated to distributable
reserves.
m) Distributable and non-distributable reserves
All income and expenses, foreign exchange gains
and losses and realised investment gains and losses
of the Company are allocated to the distributable
reserve.
n) NAV per share and earnings per share
The NAV per share disclosed on the face of the
Statement of Financial Position is calculated by
dividing the net assets by the number of Ordinary
Shares in issue at the period end.
Earnings per share is calculated by dividing the
earnings for the period by the weighted average
number of Ordinary Shares in issue during the period.
o) Changes in accounting policy and disclosures
New and amended standards and interpretations
The accounting policies adopted are consistent
with those of the previous financial year. The
Company adopted the following new and amended relevant
IFRS in the year:
IAS Statement of Cash Flows
7
The adoption of the above standard did not have
an impact on the financial position or performance
of the Company.
p) Accounting standards issued but not yet effective
The International Accounting Standards Board ("IASB")
has issued/revised a number of relevant standards
with an effective date after the date of these
financial statements. Any standards that are not
deemed relevant to the operations of the Company
have been excluded. The Directors have chosen not
to early adopt these standards and interpretations
and they do not anticipate that they would have
a material impact on the Company's financial statements
in the period of initial application.
Effective
date
IFRS Share-based payments 1 January
2 2018
IFRS Financial Instruments 1 January
9 2018
IFRS Revenue from Contracts with Customers 1 January
15 2018
In July 2014, the IASB issued the final version
of IFRS 9, Financial Instruments that replaces
IAS 39, Financial Instruments: Recognition and
Measurement and all previous versions of IFRS 9.
IFRS 9 brings together all three aspects of the
accounting for financial instruments project: classification
and measurement, impairment and hedge accounting.
IFRS 9 is effective for annual periods beginning
on or after 1 January 2018, with early application
permitted. Except for hedge accounting, retrospective
application is required but providing comparative
information is not compulsory. For hedge accounting,
the requirements are generally applied prospectively,
with some limited exceptions.
The Company plans to adopt the new standard on
the required effective date. During 2016, the Company
performed a high-level impact assessment of all
three aspects of IFRS 9. This preliminary assessment
is based on currently available information and
may be subject to changes arising from further
detailed analyses or additional reasonable and
supportable information being made available to
the Company in the future. Overall, the Company
expects no significant impact on its statement
of financial position and equity, and will perform
a more detailed assessment in 2017.
i) Classification and measurement
The Company does not expect a significant impact
on its statement of financial position or equity
on applying the classification and measurement
requirements of IFRS 9. It expects to continue
measuring at fair value all financial assets and
liabilities currently held at fair value.
ii) Impairment
IFRS 9 requires the Company to record expected
credit losses on all of its debt securities, loans
and trade receivables, either on a 12-month or
lifetime basis. The Company expects to apply the
simplified approach and record lifetime expected
losses on all investment income and other receivables.
Given that investment income and other receivables
have not been impaired to date, the Company does
not expect there to be a significant impact on
its equity from reviewing the expected credit losses
on investment income and other receivables over
their lifetimes, but it will need to perform a
more detailed analysis which considers all reasonable
and supportable information, including forward-looking
elements to determine the extent of the impact.
iii) Hedge accounting
The Company does not currently designate any hedges
as effective hedging relationships which qualify
for hedge accounting. Therefore, the Company does
not expect there to be any impact with respect
to hedge accounting on the Company as a result
of applying IFRS 9.
The impact that IFRS 15 will have on the Company's
financial statements is also considered to be immaterial
because the Company does not have any contracts
with customers which meet the definition under
IFRS 15.
4. Use of judgements and estimates
The preparation of the Company's unaudited condensed
half-yearly financial statements requires the Directors
to make judgements, estimates and assumptions that
affect the reported amounts recognised in the unaudited
condensed half-yearly financial statements and
disclosure of contingent liabilities. However,
uncertainty about these assumptions and estimates
could result in outcomes that could require a material
adjustment to the carrying amount of the asset
or liability in future periods.
Judgements
In the process of applying the Company's accounting
policies, management has made the following judgement
which had a significant effect on the amounts recognised
in the unaudited condensed half-yearly financial
statements:
i) Determination of functional currency
The performance of the Company is measured and
reported to investors in Sterling. Although the
majority of the Company's underlying assets are
held in currencies other than Sterling, because
the Company's capital is raised in Sterling, expenses
are paid in Sterling and the Company hedges substantially
all of its foreign currency risk back to Sterling
the Directors consider Sterling to be the Company's
functional currency.
Estimates and assumptions
The Company based its assumptions and estimates
on parameters available when the unaudited condensed
half-yearly financial statements were approved.
However, existing circumstances and assumptions
about future developments may change due to market
changes or circumstances arising beyond the control
of the Company. Such changes are reflected in the
assumptions when they occur.
i) Valuation of financial assets and liabilities
The Company uses the expertise of the Investment
Manager to assess the prices of investments at
the valuation date. The majority of the prices
can be independently verified with reference to
external data sources, however a minority of investments
cannot be verified by reference to an external
source and the Investment Manager secures an independent
valuation with reference to the latest prices traded
within the market place.
5. Segmental reporting
In accordance with IFRS 8, Operating Segments,
it is mandatory for the Company to present and
disclose segmental information based on the internal
reports that are regularly reviewed by the Board
in order to assess each segment's performance.
Management information for the Company as a whole
is provided internally for decision making purposes.
The Company does compartmentalise different investments
in order to monitor compliance with investment
restrictions, however the performance of these
allocations does not drive the investment decision
process. The Directors' decisions are based on
a single integrated investment strategy and the
Company's performance is evaluated on an overall
basis. Therefore, the Directors are of the opinion
that the Company is engaged in a single economic
segment of business for all decision making purposes.
The financial results of this segment are equivalent
to the results of the Company as a whole.
6. Dividends
As set out in the Prospectus, the Company intends
to distribute all of its income from investments,
net of expenses, by way of dividends on a quarterly
basis. The Company may retain income for distribution
in a subsequent quarter to that which it arises
in order to smooth dividend amounts or for the
purposes of efficient cash management.
The Company declared and paid the following dividends
during the period:
Total dividend Amount per
declared in respect Ordinary Share
Announcement of earnings in
date Pay date the period
GBP'000
19 January 24 February
2017 2017 1,005 1.65p
11 April 2017 12 May 2017 914 1.50p
------------
Dividends declared and
paid in the period 1,919
------------
Dividends declared and
paid after the period
end
25 August
19 July 2017 2017 914 1.50p
------------
In accordance with IFRS, dividends are only provided
for when they become a contractual liability of
the Company. Therefore, during the period a total
of GBP1,919,000 was recognised in respect of dividends,
none of which was outstanding at the reporting
date. The second dividend of GBP914,000 in respect
of the earnings during the period had not been
provided for at 30 June 2017 as, in accordance
with IFRS, it was not deemed to be a liability
of the Company at that date.
7. Related parties
Details of the relationships between the Company,
the Investment Manager, the Administrator, the
Broker, the Registrar, the Depositary and the Directors
are disclosed in note 8.
As at 30 June 2017, the Company had holdings in
the following investments which were managed by
the Investment Manager:
30 June 2017 31 December 2016
Holding Cost Value Holding Cost Value
GBP'000 GBP'000 GBP'000 GBP'000
Axiom Premium
Multi
Strategies 1,739 2,146 2,226 - - -
Axiom Contingent
Capital - - - 2,000 1,459 1,831
Axiom Equity C
FCP - - - 740 420 556
During the period, the Company sold 2,000 units
in Axiom Contingent Capital for GBP1,985,000, realising
a gain of GBP526,000 (30 June 2016 and 31 December
2016: sold 910 units realising GBP9,000).
During the period, the Company sold 740 units in
Axiom Equity C FCP for GBP545,000, generating a
realised gain of GBP125,000.
The Directors are not aware of any ultimate controlling
party.
8. Key contracts
a) Investment Manager
The Company has entered into an Investment Management
Agreement with Axiom Alternative Investments SARL
("Axiom") under which the Company receives investment
advice and management services.
Management fee
Under the terms of the Investment Management Agreement,
a management fee is paid to the Investment Manager
quarterly in arrears. The quarterly fee is calculated
by reference to the following sliding scale:
i. where NAV is less than or equal to GBP250 million,
1% per annum of NAV;
ii. where NAV is greater than GBP250 million but
less than or equal to GBP500 million, 1% per annum
of NAV on the first GBP250 million and 0.8% per
annum of NAV on the balance; and
iii. where NAV is greater than GBP500 million,
0.8% per annum of NAV, in each case, plus applicable
VAT.
If in any quarter (other than the final quarter)
of any accounting period the aggregate expenses
of the Company during such quarter exceed an amount
equal to one-quarter of 1.5% of the average NAV
of the Company during such quarter (such amount
being a "Quarterly Expenses Excess"), then the
management fee payable in respect of that quarter
shall be reduced by the amount of the Quarterly
Expenses Excess, provided that the management fee
shall not be reduced to an amount that is less
than zero and no sum will be payable by the Investment
Manager to the Company in respect of the Quarterly
Expenses Excess.
During the period, a total of GBP213,000 (30 June
2016: GBP210,000) was incurred in respect of Investment
Management fees, of which GBP113,000 (31 December
2016: GBP72,000) was payable at the reporting date.
Performance fee
The Investment Manager is entitled to receive from
the Company a performance fee subject to certain
performance benchmarks.
The fee is payable as a share of Total Shareholder
Return ("TSR") where TSR is defined as growth in
NAV per share plus dividends per share paid.
The performance fee, if any, is equal to 15% of
TSRs in excess of a hurdle equal to a 7% per annum
cumulative return since Admission, compounded annually.
The performance fee is subject to a high watermark.
The fee, if any, is payable annually and calculated
on the basis of audited annual accounts.
50% of the performance fee will be settled in cash.
The balance will be satisfied in shares, subject
to certain exceptions where settlement in shares
would be prohibited by law or would result in the
Investment Manager or any person acting in concert
with it incurring an obligation to make an offer
under Rule 9 of the City Code, in which case the
balance will be settled in cash.
Assuming no such requirement, the balance of the
performance fee will be settled either by the allotment
to the Investment Manager of such number of new
shares credited as fully paid as is equal to 50%
of the performance fee (net of VAT) divided by
the most recent practicable NAV per share (rounded
down to the nearest whole share) or by the acquisition
of shares in the market, as required under the
terms of the Investment Management Agreement. All
shares allotted to (or acquired for) the Investment
Manager in part satisfaction of the performance
fee will be subject to a lock-up until the date
that is 12 months from the end of the accounting
period to which the award of such shares related.
During the period, no performance fee was incurred
by the Company and there was no balance accrued
at the period end date.
Under the terms of the Investment Management Agreement,
if at any time there has been any deduction from
the management fee as a result of the Quarterly
Expenses Excess or annual expenses excess (a "management
fee deduction"), and during any subsequent quarter:
i. all or part of the management fee deduction
can be paid; and/or
ii. all or part of the management fee deduction
shortfall payment can be repaid,
by the Company to the Investment Manager without:
iii. in any quarter (other than the final quarter)
of any accounting period the aggregate expenses
of the Company during such quarter exceeding an
amount equal to one-quarter of 1.5% of the average
NAV of the Company during such quarter; or
iv. in the final quarter of any accounting period
the aggregate expenses of the Company during such
accounting period exceeding an amount equal to
1.5% of the average NAV of the Company during such
accounting period,
then such payment and/or repayment shall be made
by the Company to the Investment Manager as soon
as is reasonably practicable.
In the period ended 30 June 2017 the Quarterly
Expenses Excess and annual expenses excess which
would be repayable was GBP300,000 (31 December
2016: GBP231,000).
b) Administrator and Company Secretary
Elysium Fund Management Limited has been appointed
by the Company to provide day to day administration
services to the Company, to calculate the NAV per
share on a weekly basis and to provide company
secretarial functions required under the Law.
Under the terms of the Administration Agreement,
the Administrator is entitled to receive a fee
of GBP110,000 per annum, which is subject to an
annual adjustment upwards to reflect any percentage
change in the retail prices index over the preceding
year. In addition, the Company pays the Administrator
a time-based fee for any work undertaken in connection
with the calculation of the weekly NAV, up to a
maximum of GBP400 per NAV calculation, subject
to a maximum aggregate amount of GBP10,000 per
annum. The Administrator is also to be paid a one-off
fee of GBP35,000 in relation to the new Prospectus
issued in March 2017. The GBP35,000 is included
in share issue costs in the Unaudited Condensed
Statement of Changes in Equity.
During the period, a total of GBP61,000 (30 June
2016: GBP80,000) was incurred in respect of Administration
fees and GBP65,000 (31 December 2016: GBP30,000)
was payable to the Administrator at the reporting
date.
c) Broker
Liberum Capital Limited ("Liberum") has been appointed
to act as Corporate Broker ("Broker") for the Company.
In consideration of Liberum agreeing to act as
Broker the Company pays Liberum an annual retainer
fee of GBP75,000 per annum, paid equally in two
instalments on 1 January and 1 July each year.
For the period ended 30 June 2017, the Company
had paid GBP38,000 (30 June 2016: GBP49,000) in
respect of Broker fees. At the period end date
there was no outstanding balance due to or from
Liberum.
d) Registrar
Capita Registrars (Guernsey) Limited has been appointed
Registrar of the Company.
Under the terms of the Registrar Agreement, the
Registrar is entitled to receive from the Company
certain annual maintenance and activity fees, subject
to a minimum fee of GBP5,500 per annum.
During the period, a total of GBP10,000 (30 June
2016: GBP12,000, 31 December 2016: GBP20,000) was
incurred in respect of Registrar fees, of which
GBP4,000 was payable at 30 June 2017 (30 June 2016:
GBP2,000, 31 December 2016: GBP4,000).
e) Depositary
CACEIS Bank France has been appointed by the Company
to provide depositary, settlement and other associated
services to the Company.
Under the terms of the Depositary Agreement, the
Depositary is entitled to receive from the Company:
i. an annual depositary fee of 0.03% of NAV, subject
to a minimum annual fee of EUR25,000;
ii. a safekeeping fee calculated using a basis
point fee charge based on the country of settlement
and the value of the assets; and
iii. an administration fee on each transaction,
together with various other payment/wire charges
on outgoing payments.
During the period, a total of GBP11,000 (30 June
2016: GBP12,000) was incurred in respect of depositary
fees, and GBP21,000 (31 December 2016: GBP11,000)
was payable to the Depositary at the reporting
date.
CACEIS Bank Luxembourg is entitled to receive a
monthly fee from the Company in respect of the
provision of certain accounting services which
will, subject to a minimum monthly fee of EUR1,800,
be calculated by reference to the following sliding
scale:
i. where NAV is less than or equal to EUR50 million,
0.04% per annum of NAV;
ii. where NAV is greater than EUR50 million but
less than or equal to EUR100 million, 0.04% per
annum on the first EUR50 million of the NAV and
0.03% per annum of the remainder of the NAV; and
iii. where NAV is greater than EUR100 million,
0.04% per annum on the first EUR50 million of the
NAV, 0.03% per annum on the NAV from EUR50 million
to EUR100 million and 0.02% per annum of the NAV
above EUR100 million, in each case, plus applicable
VAT.
During the period, a total of GBP12,000 (30 June
2016: GBP14,000) was incurred in respect of fees
paid to CACEIS Bank Luxembourg, of which GBP9,000
was payable at 30 June 2017 (31 December 2016:
GBP9,000).
f) Directors' remuneration
William Scott (Chairman) is paid GBP35,000 per
annum, John Renouf (Chairman of the Audit Committee)
is paid GBP32,500 per annum, and Max Hilton is
paid GBP27,500 per annum.
The Directors are also entitled to reimbursement
of all reasonable travelling and other expenses
properly incurred in the performance of their duties.
During the period, a total of GBP47,000 (30 June
2016: GBP62,000) was incurred in respect of Directors'
fees, of which GBP24,000 (31 December 2016: GBP24,000)
was payable at the reporting date. No bonus or
pension contributions were paid or payable on behalf
of the Directors.
9. Other expenses
Period Period
from 1 from 7
January October
2017 to 2015 to
30 June 30 June
2017 2016
(unaudited) (unaudited)
GBP'000 GBP'000
Broker fees (note 8c) 38 49
Depositary fees (including
valuation agent fees) (note
8e) 35 40
PR expenses 21 43
Audit fees 12 14
Registrar fees (note 8d) 10 12
Bank charges and interest 8 26
Other expenses 11 30
------------ ------------
137 214
------------ ------------
10. Taxation
The Company is exempt from taxation in Guernsey,
and it is the intention to conduct the affairs
of the Company to ensure that it continues to qualify
for exempt company status for the purposes of Guernsey
taxation. The Company pays a fixed fee for the
exemption of GBP1,200 per annum.
The Company has a number of investments in bonds
issued in Italy. Until 6 September 2016, as a Guernsey
registered Company, any income received on Italian
bonds suffered Italian withholding tax at 26%.
In addition, Italian withholding tax was calculated,
by the Depositary, and either charged or received
on the purchase or sale of bond interest bought
or sold with bonds at a rate of 26%. From 6 September
2016, foreign investors resident in Guernsey became
entitled to benefit from exemption on interests
on Italian Government and Corporate bonds and therefore
no further Italian withholding tax should be payable.
11. Earnings per Ordinary Share
The earnings per Ordinary Share of 7.21p (30 June
2016: loss of 4.11p) is based on a profit attributable
to owners of the Company of GBP4,394,000 (30 June
2016: loss of GBP2,166,000) and on a weighted average
number of 60,930,764 (30 June 2016: 52,702,190)
Ordinary Shares in issue since 1 January 2017.
There is no difference between the basic and diluted
earnings per share.
12. Investments in bonds at fair value through
profit or loss
Period Period Period
from from from 7
1 January 7 October October
2017 2015 2015 to
to 30 to 30 31 December
June June 2016
2017 2016 (audited)
(unaudited) (unaudited)
GBP'000 GBP'000 GBP'000
Opening balance 49,145 - -
Additions in the period 76,857 85,517 124,470
Sales in the period (66,564) (36,563) (80,520)
Movement in unrealised (losses)/gains
in the period (2,142) 1,637 2,197
Movement in realised gains
in the period 2,571 71 2,998
------------ ------------ ------------
59,867 50,662 49,145
------------ ------------ ------------
Closing book cost 62,009 49,025 46,948
Closing unrealised (loss)/gain
on bonds at fair value through
profit or loss (2,142) 1,637 2,197
------------ ------------ ------------
59,867 50,662 49,145
------------ ------------ ------------
13. Collateral accounts for derivative financial
instruments at fair value through profit or loss
30 June 31 December
2017 (unaudited) 2016
(audited)
GBP'000 GBP'000
Goldman Sachs International 1,221 2,723
JP Morgan 3,440 1,550
Credit Suisse 602 162
CACEIS Bank France 111 116
------------ ------------
Total collateral held by
brokers 5,374 4,548
------------ ------------
With respect to derivatives, the Company pledges
to third parties cash and/or other liquid securities
("Collateral") as initial margin and as variation
margin. Collateral may be transferred either to
the third party or to an unaffiliated custodian
for the benefit of the third party. In the case
where Collateral is transferred to the third party,
the third party pursuant to these derivative arrangements
will be permitted to use, reuse, lend, borrow,
hypothecate or re-hypothecate such Collateral.
The third parties will have no obligation to retain
an equivalent amount of similar property in their
possession and control, until such time as the
Company's obligations to the third party are satisfied.
The Company has no right to this Collateral but
has the right to receive fungible, equivalent Collateral
upon the Company's satisfaction of the Company's
obligation in respect of the derivatives.
14. Other receivables and prepayments
30 June 31 December
2017 (unaudited) 2016
(audited)
GBP'000 GBP'000
Accrued bond interest receivable 804 794
Interest due on credit default
swaps 18 18
Other receivables and prepayments 16 13
------------ ------------
838 825
------------ ------------
15. Derivative financial instruments
Credit default swap agreements
A credit default swap agreement represents an agreement
that one party, the protection buyer, pays a fixed
fee, the premium, in return for a payment by the
other party, the protection seller, contingent
upon a specified credit event relating to an underlying
reference asset. If a specified credit event occurs,
there is an exchange of cash flows and/or securities
designed so the net payment to the protection buyer
reflects the loss incurred by holders of the referenced
obligation in the event of its default. The International
Swaps and Derivatives Association ("ISDA") establishes
the nature of the credit event and such events
include bankruptcy and failure to meet payment
obligations when due.
Period Period Period
from from from 7
1 January 7 October October
2017 2015 2015 to
to 30 to 30 31 December
June June 2016
2017 2016 (audited)
(unaudited) (unaudited)
GBP'000 GBP'000 GBP'000
Opening balance (2,238) - -
Premiums received from selling
credit default swap agreements (1,402) (634) (3,675)
Premiums paid on buying credit
default swap agreements 1,705 - 1,035
Movement in unrealised gains/(losses)
in the period 1,660 (141) 304
Realised gains in the period 802 - 98
------------ ------------ ------------
Outstanding asset/(liability)
due on credit default swaps 527 (775) (2,238)
------------ ------------ ------------
Credit default swap assets
at fair value through profit
or loss 936 - 137
Credit default swap liabilities
at fair value through profit
or loss (409) (775) (2,375)
------------ ------------ ------------
Outstanding asset/(liability)
due on credit default swaps
as at the period end 527 (775) (2,238)
------------ ------------ ------------
Interest paid or received on the credit default
swap agreements has been accounted for in the Unaudited
Condensed Statement of Comprehensive Income as
it has been incurred or received. At the period
end, GBP18,000 (30 June 2016: GBP4,000, 31 December
2016: GBP18,000) of interest on credit default
swap agreements was due to the Company.
Collateral totalling GBP5,263,000 (30 June 2016:
GBP1,598,000, 31 December 2016: GBP4,435,000) was
held in respect of the credit default swap agreements.
Foreign currency forwards
Foreign currency forward contracts are used for
trading purposes and are used to hedge the Company's
exposure to changes in foreign currency exchange
rates on its foreign portfolio holdings. A foreign
currency forward contract is a commitment to purchase
or sell a foreign currency on a future date and
at a negotiated forward exchange rate.
Period Period Period
from from from 7
1 January 7 October October
2017 2015 2015 to
to 30 to 30 31 December
June June 2016
2017 2016 (audited)
(unaudited) (unaudited)
GBP'000 GBP'000 GBP'000
Opening balance (190) - -
Purchase of foreign currency
derivatives 90,777 73,920 159,249
Closing-out of foreign currency
derivatives (90,279) (72,018) (153,270)
Movement in unrealised gains/(losses)
in the period 460 (2,840) (190)
Realised losses in the period (498) (1,902) (5,979)
------------ ------------ ------------
Outstanding asset/(liability)
due on credit default swaps
at the period end 270 (2,840) (190)
------------ ------------ ------------
Foreign currency forward assets
at fair value through profit
or loss 271 - 60
Foreign currency forward liabilities
at fair value through profit
or loss (1) (2,840) (250)
------------ ------------ ------------
Net assets/(liabilities) on
foreign currency forwards 270 (2,840) (190)
------------ ------------ ------------
Bond futures
A bond future contract involves a commitment by
the Company to purchase or sell bond futures for
a predetermined price, with payment and delivery
of the bond future at a predetermined future date.
Period Period Period
from from from 7
1 January 7 October October
2017 2015 2015 to
to 30 to 30 31 December
June June 2016
2017 2016 (audited)
(unaudited) (unaudited)
GBP'000 GBP'000 GBP'000
Opening balance 9 - -
Purchase of bond futures 990 1,343 2,552
Sale of bond futures (1,068) (1,377) (2,596)
Movement in unrealised gains
in the period 2 92 -
Realised gains in the period 70 (53) 53
------------ ------------ ------------
Balance receivable on bond
futures 3 5 9
------------ ------------ ------------
Bond future assets at fair
value through profit or loss 7 10 10
Bond future liabilities at
fair value through profit
or loss (4) (5) (1)
------------ ------------ ------------
Balance receivable on bond
futures 3 5 9
------------ ------------ ------------
Sale and repurchase agreements
Under the terms of a sale and repurchase agreement
("repo") one party in the agreement acts as a borrower
of cash, using a security held as collateral, and
the other party in the agreement acts as a lender
of cash. Almost any security may be employed in
the repo. Interest is paid by the borrower for
the benefit of having funds to use until a specified
date on which the effective loan needs to be repaid.
Period Period Period
from from from 7
1 January 7 October October
2017 2015 2015 to
to 30 to 30 31 December
June June 2016
2017 2016 (audited)
(unaudited) (unaudited)
GBP'000 GBP'000 GBP'000
Opening balance - - -
Opening of sale and repurchase
agreements (8,043) (5,918) (5,918)
Closing-out of sale and
repurchase agreements 5,078 3,554 6,077
Movement in unrealised gains
in the period (113) (90) -
Realised profit/(loss) in
the period 56 (61) (159)
------------ ------------ ------------
Total liabilities on sale
and repurchase agreements (3,022) (2,515) -
------------ ------------ ------------
Interest paid on sale and repurchase agreements
has been accounted for in the Unaudited Condensed
Statement of Comprehensive Income as it has been
incurred. At 30 June 2017 GBPnil interest (30 June
2016: GBP2,000, 31 December 2016: GBPnil) on sale
and repurchase agreements was payable by the Company.
Offsetting of credit default swap agreements
The Company presents the fair value of its derivative
assets and liabilities on a gross basis, no such
assets or liabilities have been offset in the Unaudited
Condensed Statement of Financial Position. Certain
derivative financial instruments are subject to
enforceable master netting arrangements, such as
ISDA master netting agreements, or similar agreements
that cover similar financial instruments.
The similar agreements include derivative clearing
agreements, global master repurchase agreements,
global master securities lending agreements, and
any related rights to financial collateral. The
similar financial instruments and transactions
include derivatives, sale and repurchase agreements,
reverse sale and repurchase agreements, securities
borrowing, and securities lending agreements.
The Company's agreements allow for offsetting following
an event of default, but not in the ordinary course
of business, and the Company does not intend to
settle these transactions on a net basis or settle
the assets and liabilities on a simultaneous basis.
The table below sets out the carrying amounts of
recognised financial assets and liabilities that
are subject to the above arrangements, together
with amounts held or pledged against these assets
and liabilities:
Effect of
remaining
rights of
offset that
do not meet
the criteria
for offsetting
Net amount in the Unaudited
Amounts presented Condensed
Gross offset in Unaudited Statement
carrying in accordance Condensed of Financial
amount with Statement Position
before offsetting of Financial - Cash held Net
offsetting criteria Position as collateral exposure
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
30 June 2017 (unaudited)
Financial
assets
Derivatives 800 - 800 - 800
Collateral
held 5,374 - 5,374 - 5,374
------------ ------------ ------------ ------------ ------------
Total assets 6,174 - 6,174 - 6,174
------------ ------------ ------------ ------------ ------------
Financial
liabilities
Derivatives (3,022) - (3,022) - (3,022)
------------ ------------ ------------ ------------ ------------
Total
liabilities (3,022) - (3,022) - (3,022)
------------ ------------ ------------ ------------ ------------
31 December 2016 (audited)
Financial
assets
Derivatives 207 - 207 - 207
Collateral
held 4,548 - 4,548 (2,559) 1,989
------------ ------------ ------------ ------------ ------------
Total assets 4,755 - 4,755 (2,559) 2,196
------------ ------------ ------------ ------------ ------------
Financial
liabilities
Derivatives (2,626) - (2,626) 2,559 (67)
------------ ------------ ------------ ------------ ------------
Total
liabilities (2,626) - (2,626) 2,559 (67)
------------ ------------ ------------ ------------ ------------
16. Fair value of financial instruments at fair
value through profit or loss
The following table shows financial instruments
recognised at fair value, analysed between those
whose fair value is based on:
* Quoted prices in active markets for identical assets
or liabilities (Level 1);
* Those involving inputs other than quoted prices
included in Level 1 that are observable for the asset
or liability, either directly (as prices) or
indirectly (derived from prices) (Level 2); and
* Those with inputs for the asset or liability that are
not based on observable market data (unobservable
inputs) (Level 3).
At the period end, the financial assets and liabilities
designated at fair value through profit or loss
were as follows:
Level Level Level Total
1 2 3
GBP'000 GBP'000 GBP'000 GBP'000
30 June 2017 (unaudited)
Listed bonds 55,840 4,027 - 59,867
Credit default swaps - 527 - 527
Derivative financial instruments 3 270 - 273
Sale and repurchase agreements - (3,022) - (3,022)
------------ ------------ ------------ ------------
55,843 1,802 - 57,645
------------ ------------ ------------ ------------
31 December 2016 (audited)
Listed bonds 47,467 1,678 - 49,145
Credit default swaps - (2,238) - (2,238)
Derivative financial instruments 9 (190) - (181)
------------ ------------ ------------ ------------
47,476 (750) - 46,726
------------ ------------ ------------ ------------
Level 1 financial instruments include listed bonds
and bond future contracts which have been valued
at fair value by reference to quoted prices in
active markets. No unobservable inputs were included
in determining the fair value of these investments
and, as such, alternative carrying values for ranges
of unobservable inputs have not been provided.
Level 2 financial instruments include credit default
swap agreements, foreign currency forward contracts
and sale and repurchase agreements. Each of these
financial investments are valued by the Investment
Manager using market observable inputs. The fair
value of these securities may be based on, but
are not limited to, the following inputs: market
price of the underlying securities; notional amount;
expiration date; fixed and floating interest rates;
payment schedules; and/or dividends declared.
The model used by the Company to fair value credit
default swap agreements prices a credit default
swap as a function of its schedule, deal spread,
notional value, credit default swap curve and yield
curve. The key assumptions employed in the model
include: constant recovery as a fraction of par,
piecewise constant risk neutral hazard rates and
default events being statistically independent
of changes in the default-free yield curve.
The fair values of the foreign currency forward
contracts are based on the forward foreign exchange
rate curve.
Transfers between levels
Transfers between levels during the period are
determined and deemed to have occurred at each
financial reporting date. There were no investments
classified as Level 3 during the period, and no
transfers between levels in the period. See notes
12, 13 and 15 for movements in instruments held
at fair value through profit or loss
17. Other payables and accruals
30 June 31 December
2017 (unaudited) 2016
(audited)
GBP'000 GBP'000
Investment management fee
(note 8a) 113 72
Other accruals 76 75
Administration fee (note
8b) 65 30
Depositary fees (note 8e) 30 11
Directors' fees (note 8f) 24 24
Audit fees 19 25
Registrar fees (note 8d) 4 4
------------ ------------
331 241
------------ ------------
18. Share capital
30 June 2017 (unaudited)
Number GBP'000
Authorised:
Ordinary shares of no par value Unlimited -
------------ ------------
Allotted, called up and fully
paid:
Ordinary Shares of no par value 60,930,764 -
------------ ------------
31 December 2016
(audited)
Number GBP'000
Authorised:
Ordinary shares of no par value Unlimited -
------------ ------------
Allotted, called up and fully
paid:
Ordinary Shares of no par value 60,930,764 -
------------ ------------
In May 2017, the Company renewed the Placing Programme
for a period of one year. The GBP239,000 costs
associated with this have been taken directly to
distributable reserves through the Statement of
Changes in Equity. If no shares are issued within
the duration of the Placing Programme, these costs
will be re-allocated to profit and loss in the
Statement of Comprehensive Income.
At the initial placing, on 3 November 2015 the
Company issued 50,737,667 Ordinary Shares of no
par value for GBP1.00 each, raising proceeds of
GBP50.74 million.
On 4 March 2016 the Company raised GBP3.55 million
through the placing of 3,945,555 new Ordinary Shares
of no par value. The Ordinary Shares were issued
at a price of 90.00p per share. The NAV per share
at close of business on 4 March 2016 was 89.49p
per share.
On 4 October 2016 the Company raised a further
GBP6.03 million through the placing of 6,247,542
new Ordinary Shares of no par value. The Ordinary
Shares were issued at a price of 96.50p per share.
The NAV per share on 30 September 2016 (the closest
NAV date prior to the date of issue of the Ordinary
Shares) was 94.52p per share.
At 30 June 2017, the total number of Ordinary Shares
in issue was 60,930,764 (31 December 2016: 60,930,764).
The Ordinary Shares carry the right to receive
all dividends declared by the Company. Shareholders
are entitled to all dividends paid by the Company
and, on a winding up, provided the Company has
satisfied all of its liabilities, the Shareholders
are entitled to all of the surplus assets of the
Company. Shareholders will be entitled to attend
and vote at all general meetings of the Company
and, on a poll, will be entitled to one vote for
each Share held.
19. Net asset value per Ordinary Share
The net asset value per Ordinary Share is based
on the net assets attributable to owners of the
Company of GBP60,246,000 (31 December 2016: GBP58,010,000),
and on 60,930,764 (31 December 2016: 60,930,764)
Ordinary Shares in issue at the period end.
20. Financial instruments and risk management
The Investment Manager manages the Company's portfolio
to provide Shareholders with attractive return,
while limiting downside risk, through investment
in the following financial institution investment
instruments:
* Regulatory capital instruments, being financial
instruments issued by a European financial
institution which constitute regulatory capital for
the purposes of Basel I, Basel II or Basel III or
Solvency I or Solvency II;
* Other financial institution investment instruments,
being financial instruments issued by a European
financial institution, including without limitation
senior debt, which do not constitute regulatory
capital instruments; and
* Derivative instruments, being CDOs, securitisations
or derivatives, whether funded or unfunded, linked or
referenced to regulatory capital instruments or other
financial institution investment instruments.
Following the change of investment policy, the
Company is permitted to invest in instruments issued
by, or referenced to, (i) financial institutions
in the EEA (i.e. including countries other than
the UK and the members of the EU, as per the Company's
original investment mandate) and Switzerland and
(ii) entities which are not financial institutions
in the EEA or Switzerland, but which are subsidiaries,
at the time of investment, of such institutions.
The Company invests its assets with the aim of
spreading investment risk.
Risk is inherent in the Company's activities, but
it is managed through a process of ongoing identification,
measurement and monitoring. The Company is exposed
to market risk (which includes currency risk, interest
rate risk and price risk), credit risk and liquidity
risk from the financial instruments it holds. Risk
management procedures are in place to minimise
the Company's exposure to these financial risks,
in order to create and protect Shareholder value.
Risk management structure
The Investment Manager is responsible for identifying
and controlling risks, and the Board of Directors
receives regular risk reports from the Investment
Manager.
The Company has no employees and is reliant on
the performance of third party service providers.
Failure by the Investment Manager, Administrator,
Depositary, Registrar or any other third party
service provider to perform in accordance with
the terms of its appointment could have a significant
detrimental impact on the operation of the Company.
The market in which the Company participates is
competitive and rapidly changing.
Risk concentration
Concentration indicates the relative sensitivity
of the Company's performance to developments affecting
a particular industry or geographical location.
Concentrations of risk arise when a number of financial
instruments or contracts are entered into with
the same counterparty, or where a number of counterparties
are engaged in similar business activities, or
activities in the same geographic region, or have
similar economic features that would cause their
ability to meet contractual obligations to be similarly
affected by changes in economic, political or other
conditions. Concentrations of liquidity risk may
arise from the repayment terms of financial liabilities,
sources of borrowing facilities or reliance on
a particular market in which to realise liquid
assets. Concentrations of foreign exchange risk
may arise if the Company has a significant net
open position in a single foreign currency, or
aggregate net open position in several currencies
that tend to move together.
Within the aim of maintaining a diversified investment
portfolio, and thus mitigating concentration risks,
the Company has established the following investment
restriction in respect of the general deployment
of assets:
Concentration
No more than 15% of NAV, calculated at the time
of investments, will be exposed to any one financial
counterparty. This limit will increase to 20% where,
in the Investment Manager's opinion (having informed
the Board in writing of such increase) the relevant
financial institution investment instrument is
expected to amortise such that, within 12 months
of the date of the investment, the expected exposure
(net of any hedging costs and expenses) will be
equal to or less than 15% of NAV, calculated at
the time of the investment.
Market risk
i) Price risk
Price risk exposure arises from the uncertainty
about future prices of financial instruments held.
It represents the potential loss that the Company
may suffer through holding positions in the face
of price movements. The investments in bonds and
bond futures at fair value through profit or loss
(see notes 12, 15 and 16) are exposed to price
risk and it is not the intention to mitigate the
price risk.
At 30 June 2017, if the valuation of these investments
at fair value through profit or loss had moved
by 5% with all other variables remaining constant,
the change in net assets would amount to approximately
+/- GBP2,993,000 (31 December 2016: GBP2,458,000).
The maximum price risk resulting from financial
instruments is equal to the GBP59,867,000 (31 December
2016: GBP49,145,000) carrying value of investments
at fair value through profit or loss.
The Investment Manager manages price risk by investing
in a diverse portfolio of bonds, in line with the
Prospectus. At 30 June 2017, the bond rating profile
of the portfolio as detailed in the Investment
Manager's Report was as follows:
30 June 31 December
2017 2016
Percentage Percentage
A 5.23 2.82
BBB 26.74 17.07
BB 45.82 54.11
B 10.66 14.10
CCC and below 11.55 6.49
No rating - 5.40
------------ ------------
100.00 100.00
------------ ------------
ii) Foreign currency risk
Foreign currency risk is the risk that the value
of a financial instrument will fluctuate because
of changes in foreign currency exchange rates.
Currency risk arises when future commercial transactions
and recognised assets and liabilities are denominated
in a currency that is not the Company's functional
currency. The Company invests in securities and
other investments that are denominated in currencies
other than Sterling. Accordingly, the value of
the Company's assets may be affected favourably
or unfavourably by fluctuations in currency rates
and therefore the Company will necessarily be subject
to foreign exchange risks.
In order to limit the exposure to foreign currency
risk, the Company entered into hedging contracts
during the period. At 30 June 2017, the Company
held the following foreign currency forward contracts:
Maturity date Amount to be Amount to be purchased
sold
14 September EUR27,388,000 GBP24,113,000
2017
14 September US$16,541,000 GBP12,915,000
2017
14 September DKK5,737,000 GBP678,000
2017
14 September CA$1,147,000 GBP678,000
2017
As at the period end a proportion of the net financial
assets of the Company were denominated in currencies
other than Sterling, as follows:
Investments
at fair
value Foreign
through Cash currency
profit and cash forward
or loss Receivables equivalents Exposure contract Net exposure
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
30 June 2017 (unaudited)
Euros 29,661 440 (4,418) 25,683 (24,077) 1,606
US Dollars 14,521 169 (2,525) 12,165 (12,681) (516)
Danish
Krone 631 43 - 674 (678) (4)
Canadian
Dollars 674 9 - 683 (679) 4
------------ ------------ ------------ ------------ ------------ ------------
45,487 661 (6,943) 39,205 (38,115) 1,090
------------ ------------ ------------ ------------ ------------ ------------
31 December 2016 (audited)
Euros 20,651 495 2,613 23,759 (22,902) 857
US Dollars 15,318 137 92 15,547 (16,938) (1,391)
Danish
Krone 1,084 19 457 1,559 (1,548) 11
Canadian
Dollars 646 10 39 695 (670) 25
------------ ------------ ------------ ------------ ------------ ------------
37,699 661 3,201 41,561 (42,058) (497)
------------ ------------ ------------ ------------ ------------ ------------
Other future foreign exchange hedging contracts
may be employed, such as currency swap agreements,
futures contracts and options. There can be no
certainty as to the efficacy of any hedging transactions.
At 30 June 2017, if the exchange rates had strengthened/weakened
by 5% against Sterling with all other variables
remaining constant, net assets at 30 June 2017
would have decreased/increased by GBP54,000 (31
December 2016: GBP25,000).
iii) Interest rate risk
Interest rate risk arises from the possibility
that changes in interest rates will affect future
cash flows or the fair values of financial instruments.
The Company is exposed to risks associated with
the effects of fluctuations in the prevailing levels
of market interest rates on its financial instruments
and cash flow. However, due to the fixed rate nature
of some of the bonds, cash and cash equivalents
of GBP(3,280,000) (31 December 2016: GBP6,152,000)
and investment in bonds of GBP32,443,000 (31 December
2016: GBP7,878,000) were the only interest bearing
financial instruments subject to variable interest
rates at 30 June 2017. Therefore, if interest rates
had increased/decreased by 50 basis points, with
all other variables remaining constant, the change
in the value of interest cash flows of these assets
in the period would have been GBP51,000/GBP(31,000)
(31 December 2016: GBP41,000/GBP(64,000)).
Fixed Variable Non-interest
interest interest bearing Total
GBP'000 GBP'000 GBP'000 GBP'000
30 June 2017 (unaudited)
Financial assets
Investments in bonds at
fair value through profit
or loss 14,914 32,443 12,510 59,867
Collateral accounts for
derivative financial instruments
at fair value through
profit or loss - - 5,374 5,374
Derivative financial assets
at fair value through
profit or loss 527 - 273 800
Other receivables - - 804 804
------------ ------------ ------------ ------------
Total financial assets 15,441 32,443 18,961 66,845
------------ ------------ ------------ ------------
Financial liabilities
Derivative financial liabilities
at fair value through
profit or loss (3,022) - - (3,022)
Other payables and accruals - - (331) (331)
Cash and cash equivalents - (3,280) - (3,280)
------------ ------------ ------------ ------------
Total financial liabilities (3,022) (3,280) (331) (6,633)
------------ ------------ ------------ ------------
Total interest sensitivity
gap 12,419 29,163 18,630 60,212
------------ ------------ ------------ ------------
31 December 2016 (audited)
Financial assets
Investments in bonds at
fair value through profit
or loss 34,796 7,878 6,471 49,145
Collateral accounts for
derivative financial instruments
at fair value through
profit or loss - - 4,548 4,548
Other receivables - - 812 812
Cash and cash equivalents - 6,152 - 6,152
------------ ------------ ------------ ------------
Total financial assets 34,796 14,030 11,831 60,657
------------ ------------ ------------ ------------
Financial liabilities
Derivative financial liabilities
at fair value through
profit or loss (2,238) - (181) (2,419)
Other payables and accruals - - (241) (241)
------------ ------------ ------------ ------------
Total financial liabilities (2,238) - (422) (2,660)
------------ ------------ ------------ ------------
Total interest sensitivity
gap 32,558 14,030 11,409 57,997
------------ ------------ ------------ ------------
It is estimated that the fair value of the bonds
at 30 June 2017 would increase/decrease by +/-GBP377,000
(0.63%) (31 December 2016: +/-GBP521,000 (1.06%))
if interest rates were to change by 50 basis points.
The Investment Manager manages the Company's exposure
to interest rate risk, paying heed to prevailing
interest rates and economic conditions, market
expectations and its own views as to likely movements
in interest rates.
Although it has not done so to date, the Company
may implement hedging and derivative strategies
designed to protect investment performance against
material movements in interest rates. Such strategies
may include (but are not limited to) interest rate
swaps and will only be entered into when they are
available in a timely manner and on terms acceptable
to the Company. The Company may also bear risks
that could otherwise be hedged where it is considered
appropriate. There can be no certainty as to the
efficacy of any hedging transactions.
Credit risk
Credit risk is the risk that a counterparty to
a financial instrument will fail to discharge an
obligation or commitment that it has entered into
with the Company, resulting in a financial loss
to the Company.
At 30 June 2017, credit risk arose principally
from cash and cash equivalents of nil (as overdrawn)
(31 December 2016: GBP6,152,000) and balances held
as collateral for derivative financial instruments
at fair value through profit or loss of GBP5,374,000
(31 December 2016: GBP4,548,000). The Company seeks
to trade only with reputable counterparties that
the Investment Manager believes to be creditworthy.
The cash pending investment may be held without
limit with a financial institution with a credit
rating of A-1 (Standard & Poor's) or P-1 (Moody's)
to protect against counterparty failure.
The Company may implement hedging and derivative
strategies designed to protect against credit risk.
Such strategies may include (but are not limited
to) credit default swaps and will only be entered
into when they are available in a timely manner
and on terms acceptable to the Company. The Company
may also bear risks that could otherwise be hedged
where it is considered appropriate. There can be
no certainty to the efficacy of hedging transactions.
Due to the Company's investment in credit default
swap agreements the Company is exposed to additional
credit risk as a result of possible counterparty
failure. The Company has entered into ISDA contracts
with Credit Suisse, JP Morgan and Goldman Sachs,
rated A-, A+ and A respectively by Fitch Ratings
Inc. At 30 June 2017, the overall net exposure
to these counterparties was 10.25% of NAV (31 December
2016: 3.79%). The collateral held at each counterparty
is disclosed in note 13.
Liquidity risk
Liquidity risk is defined as the risk that the
Company will encounter difficulties in realising
assets or otherwise raising funds to meet financial
commitments. The principal liquidity risk is contained
in unmatched liabilities. The liquidity risk at
30 June 2017 was low because of the liquid nature
of the investment portfolio.
In addition, the Company diversifies the liquidity
risk through investment in bonds with a variety
of maturity dates, as follows:
30 June 31 December
2017 2016
Percentage Percentage
Less than 1 year 17.73 23.90
1 to 3 years 16.20 26.97
3 to 5 years 45.73 15.79
5 to 7 years 5.38 12.30
7 to 10 years 7.86 13.54
More than 10 years 7.10 7.50
------------ ------------
100.00 100.00
------------ ------------
As at 30 June 2017, the Company's liabilities fell
due as follows:
30 June 31 December
2017 2016
Percentage Percentage
1 to 3 months 44.82 17.14
3 to 6 months - -
6 to 12 months - -
1 to 3 years 7.17 6.06
3 to 5 years 48.01 76.80
------------ ------------
100.00 100.00
------------ ------------
21. Capital management policy and procedures
The Company's capital management objectives are:
* to ensure that it will be able to meet its
liabilities as they fall due; and
* to maximise its total return primarily through the
capital appreciation of its investments.
Pursuant to the Company's Articles of Incorporation,
the Company may borrow money in any manner. However,
the Board has determined that the Company should
borrow no more than 20% of direct investments.
The Company uses sale and repurchase agreements
to increase the gearing of the Company. As at 30
June 2017 the Company had two open sale and repurchase
agreements committing the Company to make a total
repayment of GBP3,022,000 post the period end (31
December 2016: GBPnil).
As disclosed in the Unaudited Condensed Statement
of Financial Position, at 30 June 2017, the total
equity holders' funds were GBP60,246,000 (31 December
2016: GBP58,010,000).
22. Capital commitments
The Company holds a number of derivative financial
instruments which, by their very nature, give rise
to capital commitments post 30 June 2017. These
are as follows:
* At the period end, the Company had sold 18 credit
default swap agreements for a total of GBP1,438,000,
each receiving quarterly interest (31 December 2016:
17 agreements for GBP2,541,000). The exposure of the
Company in relation to these agreements at the period
end date was GBP1,438,000 (31 December 2016:
GBP2,541,000). Collateral of GBP5,374,000 at 30 June
2017 (31 December 2016: GBP4,435,000) for these
agreements was held.
* At the period end the Company had committed to 4
foreign currency forward contracts dated 14 September
2017 to buy GBP38,385,000 (31 December 2016: buy
GBP41,849,000 and EUR7,154,000 (GBP6,098,000)). At 30
June 2017, the Company could have affected the same
trades and purchased GBP38,115,000 (31 December 2016:
buy GBP42,059,000 and EUR7,131,000 (GBP6,079,000)),
giving rise to a gain of GBP270,000 (31 December
2016: loss of GBP190,000).
* At 30 June 2017, the Company had taken a long
position maturing on 27 September 2017, committing
the Company to a purchase of a gilt future for
GBP3,204,000 (31 December 2016: GBP3,088,000).
* At the period end the Company held 2 open sale and
repurchase agreements committing the Company to make
a total repayment of GBP3,022,000 (31 December 2016:
GBPnil).
23. Contingent assets and contingent liabilities
There were no contingent assets or contingent liabilities
in existence at the period end (31 December 2016:
nil).
24. Events after the financial reporting date
On 19 July 2017, the Company declared a dividend
of 1.50p per Ordinary Share for the period from
1 April 2017 to 30 June 2017, out of the profits
for the period ended 30 June 2017, which (in accordance with IFRS) was not provided for at 30 June 2017 (see note 6). This dividend will be paid on 25 August 2017.
-- ENDS --
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR QBLFFDVFXBBK
(END) Dow Jones Newswires
August 11, 2017 02:00 ET (06:00 GMT)
1 Year Axiom European Financial... Chart |
1 Month Axiom European Financial... Chart |
It looks like you are not logged in. Click the button below to log in and keep track of your recent history.
Support: +44 (0) 203 8794 460 | support@advfn.com
By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions
